[SPEAKER_00]: This was the week where the death spiral kicked into a much higher gear.
[SPEAKER_00]: The more Bitcoin goes down, the more stretch goes down, the more strategy goes down.
[SPEAKER_00]: The more losses investors have, which means the more investors who file lawsuits and the lawsuits are for more and more money.
[SPEAKER_00]: You're going to have tens of billions of dollars that strategy is going to owe investors in these class action losses.
[SPEAKER_00]: I mean, you get crickets now at CNBC.
[SPEAKER_00]: I think they got some liability.
[SPEAKER_00]: I think they're going to get sued.
[SPEAKER_00]: I think the financial journalists that enabled this, that should have known better, they legitimized this scam.
[SPEAKER_00]: They're probably going to get sued, too.
[SPEAKER_00]: Three weeks ago on June 5th, I did a podcast from my boat.
[SPEAKER_00]: And the title of that podcast was, the Death Spiral has begun.
[SPEAKER_00]: And the Death Spiral referred to shares of strategy.
[SPEAKER_00]: And the reason I believe that strategy was entering a Death Spiral was because the share price of their flagship preferred stock
[SPEAKER_00]: STRC is the ticker symbol, had broken below 100, which was the power value of the shares, and I think it closed around 93 to 94.
[SPEAKER_00]: So that was a significant breakdown, because the idea behind stretch was that the share price would stay at around 100.
[SPEAKER_00]: That's why it was being marketed as a secure income-oriented investment because your principle was pretty much locked in because the share price was going to remain at 100.
[SPEAKER_00]: Now, I had been criticizing the marketing strategy behind stretch since the inception because I called it a Ponzi scheme, which is exactly what it is because the mechanism for paying
[SPEAKER_00]: you know coupon or preferred dividend was not the income being generated by strategy as an operating company because strategy didn't generate any income was really losing money.
[SPEAKER_00]: There's a tiny software business beneath the pile of Bitcoin, but that software business can't support
[SPEAKER_00]: The, I don't know, 12 trillion, 15 trillion worth of preferred, plus there's another five, I mean, 15 billion of preferred.
[SPEAKER_00]: And there's another whatever, five, six billion of convertible debt, not sure the exact numbers.
[SPEAKER_00]: But the software business can't support that at all.
[SPEAKER_00]: And the money that strategy was counting on to pay the dividend obligations to the preferred was going to come from selling more preferred.
[SPEAKER_00]: That sailor would keep on issuing through a strategy more preferred stock, and as it raised money,
[SPEAKER_00]: It would use some of that money to pay the dividends on the preferred, and it would use the rest of it to buy more Bitcoin, and it would keep on doing that growing its Bitcoin per share and raising the money by selling stretch.
[SPEAKER_00]: the reason that sailor claimed that he could do this, that he could afford to pay 11.5% was that Bitcoin was going to appreciate by 30% a year, and because Bitcoin goes up by 30% a year, he could afford to give the first 11.5% to stretch and take out all of the volatility, so that there were two securities
[SPEAKER_00]: One stretch, no volatility, $100 price, 11.5% yields, and then common stock strategy shares, no yield, but the rest of the upside strategy was going to get the other 20% plus giving the first 10% to stretch.
[SPEAKER_00]: Now I said, look, this is ridiculous.
[SPEAKER_00]: Bitcoin is not going to go up 30 percent a year.
[SPEAKER_00]: There's nothing you could base that on other than looking at the return from inception when Bitcoin started at nothing.
[SPEAKER_00]: But the most recent five-year period, Bitcoin has gone sideways.
[SPEAKER_00]: There have been no returns.
[SPEAKER_00]: In fact, Bitcoin today and it closed just below 60,000 is lower than it was in April of 2021.
[SPEAKER_00]: And it's high that year was in November of 2021.
[SPEAKER_00]: But we're lower than that too, obviously.
[SPEAKER_00]: So you have five years where Bitcoin has gone down.
[SPEAKER_00]: So how can you say that it's going to go up 30% a year when recent history doesn't bear that out?
[SPEAKER_00]: But anyway, the entire premise was built on this fantasy.
[SPEAKER_00]: But the funding mechanism, where you get the money to pay old investors by selling stock to new investors, that's a classic Ponzi scheme.
[SPEAKER_00]: And I called scratch a Ponzi from day one, and the main reason people argued with me and claimed that it was an Ponzi was because Sailor was acknowledging that he was admitting.
[SPEAKER_00]: that that was how the money was being raised.
[SPEAKER_00]: Now, he didn't call it a Ponzi.
[SPEAKER_00]: He just described a funding mechanism that is exactly a Ponzi.
[SPEAKER_00]: And just because you're upfront and admitted to Ponzi.
[SPEAKER_00]: Again, not using the words Ponzi in your admission, but admitting that you're funding it,
[SPEAKER_00]: exactly the way Ponzi's are funded.
[SPEAKER_00]: That's what differentiates a Ponzi scheme from a legitimate investment.
[SPEAKER_00]: of legitimate investment, the investors are paid out of the profits of the business, the business generates a profit, and it uses those profits to pay investors.
[SPEAKER_00]: In a Ponzi, there is no profit generating business.
[SPEAKER_00]: You pay the old investors by raising money from new investors.
[SPEAKER_00]: And the reason that's illegal is because eventually it collapses.
[SPEAKER_00]: It can't go on indefinitely.
[SPEAKER_00]: And so I pointed out that just because sailor admits it's a Ponzi,
[SPEAKER_00]: doesn't mean it's not a Ponzi.
[SPEAKER_00]: It just means that the people who are participating in are that much gummer for actually knowingly going into a Ponzi scheme.
[SPEAKER_00]: And I pointed out that normally the the telltale sign of a Ponzi scheme is when the yield is too good to be true.
[SPEAKER_00]: and that was the case with stretch because the yield is 11.5%.
[SPEAKER_00]: How could that be the yield?
[SPEAKER_00]: Jump bonds don't even yield 11%.
[SPEAKER_00]: And everybody knows junk bonds are risky.
[SPEAKER_00]: Sailor was marketing this thing as conservative, as appropriate, suitable for retirees who wanted to preserve their principle.
[SPEAKER_00]: So clearly, a conservative investment
[SPEAKER_00]: that's too good to be true.
[SPEAKER_00]: That's generally all you have to indicate a Ponzi, because the promoter of a Ponzi pretends that the yield is coming from an actual business.
[SPEAKER_00]: You know, when Ponzi himself created the first Ponzi scheme, of course, it wasn't called a Ponzi scheme yet, because he was the first one to do it in a big way, but he had a scheme where it was trading postal coupons and it was the trading of the postal coupons that he was doing that was supposedly enabling him to pay
[SPEAKER_00]: uh... the investors he he didn't admit that he was getting money from new investors to pay the old investors that was the pawns he beneath the fraud same thing with bernie made off bernie made off was generating these ten percent annual return something like that but he claimed it was his stock trading strategies he had fake confirms and option trades or whatever where he was pretending that the money came from legitimate sources
[SPEAKER_00]: They didn't even have a pretence.
[SPEAKER_00]: They came right out and told you it was a Ponzi, except they told you in the fine print of the prospectus, because all of their marketing material, they're everything that they used to promote stretch, didn't mention all the risks in the fine print in the prospectus.
[SPEAKER_00]: It just said that this is safe.
[SPEAKER_00]: This is for retirees.
[SPEAKER_00]: You're going to get 11% a year.
[SPEAKER_00]: We've stripped out the volatility.
[SPEAKER_00]: So if you want risk and you could take volatility by Bitcoin, by a strategy common, if you don't want the risk, if you don't have the stomach for the downside, then by stretch and just live off this great 11% yield.
[SPEAKER_00]: It's better than a bank, better than a CD, it's better than a bond.
[SPEAKER_00]: So I call that out as BS,
[SPEAKER_00]: The minute I heard it, right?
[SPEAKER_00]: Just like when I was, did that debate with Yashinsky as Celsius, and I knew right away that what he had was a Ponzi based on the way he described the returns and what he had, and I ended up being right, the government figured it out.
[SPEAKER_00]: I don't know how much longer it took on, but eventually the guy went to jail for doing exactly what I accused him of doing, just based on one debate.
[SPEAKER_00]: You know, and so it's worse.
[SPEAKER_00]: A lot more people are going to lose a lot more money than in Celsius.
[SPEAKER_00]: But anyway, so I knew that.
[SPEAKER_00]: But what happened three weeks ago when I did my podcast, when I saw the preferred break below 100 in that way, I knew it was over.
[SPEAKER_00]: because in order for a sailor to get the yield back up or get the price back up to a hundred, so his investors aren't losing money because he promised them that they wouldn't, he has to raise the dividend.
[SPEAKER_00]: But they were already having trouble convincing the markets that they could pay 11.5.
[SPEAKER_00]: If they had a raise the yield to 13 or 14 or 15 percent, it would compound the problem because now you have a bigger obligation.
[SPEAKER_00]: on strategy now because now strategy has to pay even more income that it doesn't have and what I knew is that now
[SPEAKER_00]: because they could no longer sell any more stretch.
[SPEAKER_00]: Because the only way to sell more stretch is to get the price up to 100.
[SPEAKER_00]: But he couldn't do that without substantially raising the yield.
[SPEAKER_00]: So I knew that he was out of the business of selling stretch.
[SPEAKER_00]: Which again, he described as the best products since the iPhone.
[SPEAKER_00]: They were just, you know, grabbing them off the shelves, it was great.
[SPEAKER_00]: Yeah, it was great because it was too good to be true.
[SPEAKER_00]: People were buying this stuff.
[SPEAKER_00]: But I knew, okay, sailor can't buy Bitcoin anymore
[SPEAKER_00]: How's he going to buy Bitcoin?
[SPEAKER_00]: Well, the only thing he can do is he can sell strategy stock.
[SPEAKER_00]: But I thought he was stuck because that strategy stock was no longer trading at a premium.
[SPEAKER_00]: So he couldn't create a positive Bitcoin yield.
[SPEAKER_00]: In fact, it was at a small discount.
[SPEAKER_00]: So I knew that if he actually sold strategy stock to buy Bitcoin,
[SPEAKER_00]: shareholder's would actually own less Bitcoin after they were bought because he's actually selling more Bitcoin that he's buying because his stock is trading at this count.
[SPEAKER_00]: So he has to sell more than a Bitcoin to buy a Bitcoin.
[SPEAKER_00]: So every time he buys Bitcoin by selling shares, he ends up with less Bitcoin per share.
[SPEAKER_00]: He has more Bitcoin in aggregate.
[SPEAKER_00]: But because he had an issue more shares, each share represents a lower quantity Bitcoin.
[SPEAKER_00]: So you're destroying shareholder value.
[SPEAKER_00]: And so I knew if you started to do that, the shareholders would run because why sit around and wait for that.
[SPEAKER_00]: And the minute he do that, I knew that shares a stretch we're gonna start to fall.
[SPEAKER_00]: And it was gonna be a loop.
[SPEAKER_00]: It was gonna be a death spiral.
[SPEAKER_00]: Cause the more stretch went down, the more people were gonna sell it because now they're losing money.
[SPEAKER_00]: And now that puts more pressure to raise the yield, which you can't do, but he has to keep buying Bitcoin and he can't sell stretch.
[SPEAKER_00]: But now he can't buy Bitcoin so now Bitcoin's gonna go down because the biggest buyer is sideline and of course then he's gonna have to sell Bitcoin and we know he can't sell Bitcoin He tried to sell 32 Bitcoin and the market collapsed
[SPEAKER_00]: And so that's no longer an option, but how is he gonna fund all these obligations if he can't sell Bitcoin?
[SPEAKER_00]: How is he gonna pay interest when it's new?
[SPEAKER_00]: But he's got a lot more than that or the principal rather on the convertible notes when they're due.
[SPEAKER_00]: But now, and I've been warning about this also, it's the legal liabilities because strategy is gonna get hit.
[SPEAKER_00]: with lawsuits, shareholder lawsuits, especially from the stretch shareholders who bought like 15 billion worth of this thing.
[SPEAKER_00]: They've got a great lawsuit.
[SPEAKER_00]: They can't lose as far as I'm concerned.
[SPEAKER_00]: And I pointed this out from the beginning that basically stretch came with a free put because anybody who bought stretch based on sailors, material misrepresentations that downplayed the risk and just pying the sky on the return, they're gonna get their money back but not only is he gonna get sued from the stretch buyers
[SPEAKER_00]: He's going to get sued from the common equity buyers.
[SPEAKER_00]: They're going to sue their losses or enormous.
[SPEAKER_00]: And the reason that he has exposure there,
[SPEAKER_00]: is that strategy is a security regulated by the SEC.
[SPEAKER_00]: So a lot of guys that just go out there and pump Bitcoin, it's not a security, so they have a lot more liberty to talk.
[SPEAKER_00]: Sailor does not, as the CEO or the chairman of a publicly traded company,
[SPEAKER_00]: He is held to a different standard.
[SPEAKER_00]: There are marketing rules and things that you can and can't say.
[SPEAKER_00]: What when he was out there telling people, Bitcoin is going to $10 million, $20 million.
[SPEAKER_00]: Worst case scenario, it goes to $5 million.
[SPEAKER_00]: You got to put all your money into Bitcoin.
[SPEAKER_00]: Don't own anything but Bitcoin.
[SPEAKER_00]: More get your house to buy Bitcoin, leverage your business to buy Bitcoin.
[SPEAKER_00]: max out your credit cards to buy Bitcoin sell an organ to buy Bitcoin.
[SPEAKER_00]: I mean, all this stuff to the extent that people did that.
[SPEAKER_00]: I mean, I doubt anybody sold their kidney, but they're probably our people that took out loans and bought Bitcoin or strategy.
[SPEAKER_00]: But the main reason he was promoting Bitcoin was to promote his own company strategy because it was a Bitcoin treasury company creating Bitcoin credit.
[SPEAKER_00]: So
[SPEAKER_00]: These pie and the sky forecast based on nothing, right?
[SPEAKER_00]: There's no way to defend these forecasts as being rationally based.
[SPEAKER_00]: It's just all hype, but it was all made to further the interest of strategy, to pump up the price of the only asset that strategy had.
[SPEAKER_00]: And people listen to that and they bought his stock and they're going to lose a lot of money.
[SPEAKER_00]: Strategy is down 85% right now from its peak.
[SPEAKER_00]: These are massive losses.
[SPEAKER_00]: And so investors are going to file lawsuits against strategy to recover these losses and strategy is going to lose.
[SPEAKER_00]: Where are they going to get the money to pay tens of millions in judgments?
[SPEAKER_00]: They only have one way to get it, selling their Bitcoin, and they're going to.
[SPEAKER_00]: And as I've said, this company is going bankrupt eventually.
[SPEAKER_00]: All that Bitcoin is going to be sold at a massive loss.
[SPEAKER_00]: They're not even going to raise enough money to pay off all their liabilities.
[SPEAKER_00]: But the common shares are going to be worthless.
[SPEAKER_00]: because in a bankruptcy the preferred shares are senior to the common and not only are they senior to get a hundred dollars to get power back but if they suspend the dividend all the unpaid dividends accumulate and all of that has to be paid to the preferred before the common gets anything but before they get anything
[SPEAKER_00]: They're going to have to pay all the plaintiffs that win these lawsuits, and they're going to have to replay the creditors before the strict shareholders get a dime, the convertible known holders have to be made whole.
[SPEAKER_00]: So this company is going to completely collapse.
[SPEAKER_00]: I was dead on accurate when I said it three weeks ago.
[SPEAKER_00]: Nobody was really talking about this the way I was.
[SPEAKER_00]: Now you have more people worried about it.
[SPEAKER_00]: Given what happened this week, this was the week where the death spiral kicked into a much higher gear.
[SPEAKER_00]: And I'm going to talk about that on the other side of this commercial break.
[SPEAKER_00]: So stick around.
[SPEAKER_00]: Alright, so let me talk about what happened this week.
[SPEAKER_00]: Bitcoin dropped on the week.
[SPEAKER_00]: But, you know, it wasn't that big a drop for Bitcoin itself.
[SPEAKER_00]: About 8.3%.
[SPEAKER_00]: Now, yeah, I guess that's a decent drop for Bitcoin.
[SPEAKER_00]: 8.3%.
[SPEAKER_00]: But Bitcoin is only 1% below where it was on June 5th.
[SPEAKER_00]: So when I did the Death Spiral podcast, since that day, Bitcoin's only down 1%.
[SPEAKER_00]: That's not that big a deal.
[SPEAKER_00]: The entire decline was today in this week.
[SPEAKER_00]: In fact, in the first two weeks after I recorded that podcast, Bitcoin actually went up.
[SPEAKER_00]: But strategy and stretch did not.
[SPEAKER_00]: Micro strategy or strategy, you know, again, it should be called micro, but it's called strategy strategy was down 30%, this week in one week down 30%, down 32%, since my June 5th podcast.
[SPEAKER_00]: So it held up okay for those first two weeks, just losing about 2%, but remember, it lost 2%,
[SPEAKER_00]: didn't help strategy, which meant that the discount, and the discount now, it's over 30% I think.
[SPEAKER_00]: It's huge, much or exactly what it is, but it's big.
[SPEAKER_00]: And it got a lot bigger this week, but it got bigger in the weeks prior, because Bitcoin was going up and strategy was not.
[SPEAKER_00]: It actually moved down a little bit, but down 30% this week.
[SPEAKER_00]: Stretch.
[SPEAKER_00]: which was only down about 6%.
[SPEAKER_00]: When I recorded that video and said that's it, the death spiral is started.
[SPEAKER_00]: It dropped another 18%.
[SPEAKER_00]: This week, 18%, more than Bitcoin.
[SPEAKER_00]: Bitcoin only fell 8.3% this week, and strategy sell to 18.
[SPEAKER_00]: Michael Sale or told people that strategy didn't have any volatility, that that was stripped out, that if you were willing to accept the risk, you buy Bitcoin.
[SPEAKER_00]: If you don't want risk, you just take the sure thing with your 11% yield and by stretch, stretch actually went down more than Bitcoin, despite the promise that it didn't have the volatility.
[SPEAKER_00]: And since my June fifth podcast, it's down 20%.
[SPEAKER_00]: So most of the decline this week, but it did go down 20%.
[SPEAKER_00]: Well, Bitcoin was rising.
[SPEAKER_00]: The reason these stocks crater this week is because Bitcoin stopped going up and started going down.
[SPEAKER_00]: Now, the low for the day on stretch, believe it or not, was 71 in a quarter.
[SPEAKER_00]: That's a 28.75% drop.
[SPEAKER_00]: Somebody sold it down there and that person might have bought it at 100 a few weeks ago.
[SPEAKER_00]: And now they've lost 28% of their money.
[SPEAKER_00]: That's more than two years of dividend income.
[SPEAKER_00]: So some conservative retiree who bought into this nonsense, who wanted the 11%.
[SPEAKER_00]: buys this a month ago, maybe he's got one dividend now.
[SPEAKER_00]: They pay every two weeks now.
[SPEAKER_00]: So you've probably got a couple of small dividends.
[SPEAKER_00]: But now he's lost over two years worth the dividends.
[SPEAKER_00]: In fact, if you don't sell and you own the stock right now, it's going to take you two years of collecting those dividends to get your money back to get even if you want to sell.
[SPEAKER_00]: Of course, if you hold this thing for another two years, it's going to be a lot lower.
[SPEAKER_00]: It may even be zeroed out.
[SPEAKER_00]: by that.
[SPEAKER_00]: Because the death spiral is going to continue.
[SPEAKER_00]: And what strategy did for the past three weeks?
[SPEAKER_00]: And I commented on this on my podcast from I think two weeks ago and last week when when sailor did this.
[SPEAKER_00]: Each week he sold strategy stock, common stock, and used the money
[SPEAKER_00]: So he could have more money.
[SPEAKER_00]: Now he's got about, I think, 1.1 billion in cash or 1.2 billion.
[SPEAKER_00]: I forget enough to maybe cover his stretch obligations for seven months, big deal.
[SPEAKER_00]: But he also bought more Bitcoin.
[SPEAKER_00]: Each week he's been buying 100, 100 million worth of Bitcoin or something like that.
[SPEAKER_00]: But why is he buying more Bitcoin?
[SPEAKER_00]: because buying Bitcoin destroys shareholder value.
[SPEAKER_00]: It means that each time he buys Bitcoin, as I said at the beginning, his shareholder's own less Bitcoin.
[SPEAKER_00]: It makes no sense to do this.
[SPEAKER_00]: what he really should be doing, if he was trying to increase shareholder value, he would be selling the Bitcoin that he has and then using the proceeds to buy back strategy stock, which is out of massive discount.
[SPEAKER_00]: If he did that, he would create a positive Bitcoin yield.
[SPEAKER_00]: Yes, in total, strategy would have fewer Bitcoin, but on a per share basis, which is what counts, each share would be backed by more Bitcoin.
[SPEAKER_00]: But he can't do that because the minute sailor, strategy tries to sell a bunch of Bitcoin, Bitcoin is gonna crash.
[SPEAKER_00]: He can't do that.
[SPEAKER_00]: And the reason he's now buying Bitcoin is to prove that he's still a buyer because he knows that strategy's buying is the main thing holding up Bitcoin.
[SPEAKER_00]: And it's not just that he's buying.
[SPEAKER_00]: because he's a committed buyer and because everybody knows he's buying other people are willing to buy they're willing to ride along on his uh... you know uh... uh... code strings because he is supporting the market it makes you feel
[SPEAKER_00]: more confident to buy if you know every week, sailor is buying all this Bitcoin.
[SPEAKER_00]: And so he wants to maintain the idea that he's still a buyer.
[SPEAKER_00]: And so in order to do that, he's sacrificing his shareholders.
[SPEAKER_00]: He's asking his shareholders to take one for the Bitcoin team.
[SPEAKER_00]: Hey, yes, we're deluding your Bitcoin per share, but it's for a good cause.
[SPEAKER_00]: Because by doing this,
[SPEAKER_00]: My point back then was, why would shareholders want to be sacrificed in that way?
[SPEAKER_00]: Hey, I'll let somebody else be sacrificed, but not me, if that's the new business model, I'm out.
[SPEAKER_00]: Because the reason that people owned strategy was because he was creating a positive Bitcoin yield.
[SPEAKER_00]: He was growing the Bitcoin per share.
[SPEAKER_00]: If he's going to shake the Bitcoin per share, even if you like Bitcoin, why would you like that?
[SPEAKER_00]: You would just sell your strategy and just go buy some Bitcoin on your own.
[SPEAKER_00]: So at least you would maintain your Bitcoin instead of having sale or sacrifice it to prop up the price, just own Bitcoin and avoid the sacrifice.
[SPEAKER_00]: So I knew that these types of sales would push strategy down even more.
[SPEAKER_00]: And then the more strategy falls, the more Bitcoin strategy loses every time it sells shares in order to raise cash to pay the dividends, or to buy more Bitcoin.
[SPEAKER_00]: And I knew that a weak strategy would spill over into a weak stretch, and it would all be like a self-reinforcing spiral, and it would eventually spill over into Bitcoin itself, which is what has happened, because now, everybody knows
[SPEAKER_00]: and he's going to be a major seller.
[SPEAKER_00]: The more the stock goes down.
[SPEAKER_00]: In fact, at some point, his stock is going to be so cheap.
[SPEAKER_00]: It's going to be trading at such a enormous discount to its NAV that there's no justifiable way, especially when he's already being sued by shareholders to do something that's going to
[SPEAKER_00]: strength in the case of the people who are suing him because he is deliberately destroying shareholder value in order to prop up the price of Bitcoin.
[SPEAKER_00]: That is not the job of the CEO strategy.
[SPEAKER_00]: It's to maximize value.
[SPEAKER_00]: Now he might say, well, the only way I can maximize my value is to maximize Bitcoin.
[SPEAKER_00]: but now he's actually digging himself into a deeper hole if he admits that because that's probably exactly what the lawyers are going to alleged because all these misstatements about Bitcoin are really designed to prop up strategy.
[SPEAKER_00]: And so all the security laws apply to everything that Salar has said about Bitcoin.
[SPEAKER_00]: So he is held to a much different standard than all the other pumpers who are just
[SPEAKER_00]: and they're not doing it through an SEC regulated publicly traded company like like salaries.
[SPEAKER_00]: Now, there are a lot of other people.
[SPEAKER_00]: I did a spaces on Wednesday, and you know, it's up on my, my ex account if you want to, you know, listen to that too.
[SPEAKER_00]: I did that for three hours, and of course, since then we've had a big drop in strategy and a big drop in stretch.
[SPEAKER_00]: The two days
[SPEAKER_00]: And during that space, as I said, get the hell out.
[SPEAKER_00]: These things are gonna crash.
[SPEAKER_00]: And I had people coming on trying to argue with me, tell me that I was wrong, that strategy was in good shape, that they had all this, you know, a 50 billion or whatever worth of Bitcoin, you know, they could pay the dividend for 30 years or whatever.
[SPEAKER_00]: And I said, you guys are dreaming, because that's based on Bitcoin, stay at 50,000 at 50,000 a Bitcoin or 60,000 a Bitcoin.
[SPEAKER_00]: It's not gonna do that.
[SPEAKER_00]: because now that strategy is in this box, now that it's gonna be a seller, not a buyer, why wouldn't Bitcoin go up?
[SPEAKER_00]: In fact, everybody expects a big rally in Bitcoin to bail sailor out.
[SPEAKER_00]: Where's this rally going to come from?
[SPEAKER_00]: If Bitcoin couldn't rally when strategy was buying all this Bitcoin, how the hell is it gonna rally when they stop buying it?
[SPEAKER_00]: Or when they have to sell it?
[SPEAKER_00]: and the more Bitcoin goes down, the more stretch goes down, the more strategy goes down, the more losses investors have, which means the more investors who file lawsuits and the lawsuits are for more and more money.
[SPEAKER_00]: You're gonna have tens of billions of dollars of money that strategy is gonna owe investors in these class action lawsuits.
[SPEAKER_00]: In fact, just the other day, I think it was yesterday,
[SPEAKER_00]: We're organizing a class action lawsuit against strategy and I expect more more lawyers, you know, to come up, come up because whenever people lose a lot of money, you know, it's like, you know, sharks smell and blood.
[SPEAKER_00]: They all come running.
[SPEAKER_00]: This is the slam duck.
[SPEAKER_00]: This is an easy to win case.
[SPEAKER_00]: As long as it's framed properly, as long as the plaintiffs,
[SPEAKER_00]: agree they bought it because of the representations made by sailor.
[SPEAKER_00]: It was sailor that convinced me to do it.
[SPEAKER_00]: It was his statements.
[SPEAKER_00]: That's why I bought.
[SPEAKER_00]: You're going to win.
[SPEAKER_00]: So as investors realize that these liabilities are gonna be piling up, then that's gonna be another reason to sell strategy.
[SPEAKER_00]: Bigger discount, bigger losses.
[SPEAKER_00]: That's fueling the death spiral.
[SPEAKER_00]: But also don't you think all these ETF owners, they're gonna bail out too, because they're all losing money now.
[SPEAKER_00]: Remember, the guys that got in on the ETFs over the last three or four years, they're down.
[SPEAKER_00]: and they're not Bitcoin Maxis, they're not, they didn't buy Bitcoin because they believe in the real premise of Bitcoin.
[SPEAKER_00]: If they did, they'd be self-custody, right?
[SPEAKER_00]: They'd have their own Bitcoin.
[SPEAKER_00]: But they don't, they're buying it like a Sustock.
[SPEAKER_00]: They're buying an ETF.
[SPEAKER_00]: They're not using it the way Bitcoin is supposedly supposed to be used.
[SPEAKER_00]: They're buying it as a trade.
[SPEAKER_00]: They're just trying to make money.
[SPEAKER_00]: Well, they're not making money, they're losing money.
[SPEAKER_00]: Bitcoin didn't go up with gold when gold rally to 5,000 Bitcoin didn't rally and then when the text stocks had a huge rally and the Nasdaq made a new high Bitcoin didn't rally there either.
[SPEAKER_00]: So it's not going up with risk assets, it's not going up with risk off, it's not digital gold, it's not a viable, you know, speculative asset.
[SPEAKER_00]: So they're going to be cashing out.
[SPEAKER_00]: and a lot of these other Bitcoin treasury companies that have been the big buyers.
[SPEAKER_00]: Now that strategy is blown up, that's it.
[SPEAKER_00]: There are no more Bitcoin treasury companies, no more are going to be established and the ones that already exist, they're going to start liquidating too.
[SPEAKER_00]: They're going to be selling.
[SPEAKER_00]: So Treasury Company is selling Bitcoin, ETF investor, selling Bitcoin, strategy, selling Bitcoin, who the hell's gonna buy it?
[SPEAKER_00]: It's not going up, it's going down, and this death spiral is just gonna accelerate the demise.
[SPEAKER_00]: Anyway, it wasn't just fools' digital gold that had a rough week.
[SPEAKER_00]: It was gold itself.
[SPEAKER_00]: Real gold also went down quite a bit.
[SPEAKER_00]: In fact, gold this week traded below 4,000.
[SPEAKER_00]: The low on gold was $3,900 and $70.
[SPEAKER_00]: Now, we didn't close below 4,000.
[SPEAKER_00]: We had a little bit of a recovery the past couple of days.
[SPEAKER_00]: So, all of that decline took place in
[SPEAKER_00]: Monday through Wednesday, that's how bad it was.
[SPEAKER_00]: Gold closed today up about $62 at $8,000 in 88.60.
[SPEAKER_00]: Silver.
[SPEAKER_00]: down even more.
[SPEAKER_00]: In fact, silver drop, 11.3% on the week.
[SPEAKER_00]: But it closed significantly off the low.
[SPEAKER_00]: Silver got as low as 55.99.
[SPEAKER_00]: So a penny below 56.
[SPEAKER_00]: It closed at 59.05.
[SPEAKER_00]: So...
[SPEAKER_00]: Still below 60, but it was a big shake out in golden silver.
[SPEAKER_00]: I think we hit a lot of stops because I think some people might have had stops, not just below the low, but below 4,000.
[SPEAKER_00]: And when gold was below 4,000 and it spent two days during the week where it traded below 4,000.
[SPEAKER_00]: Wednesday and Thursday.
[SPEAKER_00]: sentiment got very, very negative on gold, and it's as oversold as it's been in many, many years.
[SPEAKER_00]: It's, as more, it's, I think it's more oversold now than it was over bought when it was at 5600.
[SPEAKER_00]: So I think that that negative sentiment hitting those stops,
[SPEAKER_00]: You know, there's a good chance that that's been it, that that's the bottom of this, of this decline.
[SPEAKER_00]: Silver, you know, never got back down to 50.
[SPEAKER_00]: I don't expect it to get down to 50.
[SPEAKER_00]: And honestly, I didn't think it would get this low, but it did.
[SPEAKER_00]: But,
[SPEAKER_00]: Given the contest of the bull market, $59 silver, compared to where it was a year ago, this is a huge bull market.
[SPEAKER_00]: It is a big breakout.
[SPEAKER_00]: Yes, silver is down more than 50% from its peak, but it tripled before the drop.
[SPEAKER_00]: So silver went on a rally that I've never seen in my career.
[SPEAKER_00]: We're in a very short period of time.
[SPEAKER_00]: It went from 30 to 120.
[SPEAKER_00]: So the fact that it pulled back and again, remember, the catalyst for the pullback was the war.
[SPEAKER_00]: The war started and it was a by the rumor sell the fact because part of the reason for the rallying precious metals was the anticipation of the war.
[SPEAKER_00]: Then the war started and it was already over bought and we had a by the rumor sell the fact.
[SPEAKER_00]: But the more recent next leg down was all about Kevin Wash and the perception that he's some uber hawk, that he's the reincarnation of a Paul Volker.
[SPEAKER_00]: And all this talk, all this tough talk is just talk.
[SPEAKER_00]: I don't know if the Fed is gonna raise rates at all.
[SPEAKER_00]: The market is now pricing in two or three rate hikes.
[SPEAKER_00]: But their quarter point rate hikes, even if we get them, they're too little too late to actually bring inflation down to 2%.
[SPEAKER_00]: They need much more aggressive interest rates, which are not gonna happen, but I don't even know if these hikes are gonna happen.
[SPEAKER_00]: Because the Fed really was going to hike rates.
[SPEAKER_00]: Why didn't they do it at the last meeting?
[SPEAKER_00]: They had plenty of opportunity.
[SPEAKER_00]: No, what do they do?
[SPEAKER_00]: They established these, well, not committees, task force to stay a five task force now, to study.
[SPEAKER_00]: So they may not do anything until they get the recommendation of these task forks.
[SPEAKER_00]: And by the way, the longer they wait to hike rates, the less likely they are to do it, they might actually cut.
[SPEAKER_00]: And it's not going to be because inflation is coming down.
[SPEAKER_00]: That ain't going to happen.
[SPEAKER_00]: Flesh is going up.
[SPEAKER_00]: If they cut, it's because the economy is weak, because the stock market, the real estate market are weak.
[SPEAKER_00]: It's because bond market might be weak.
[SPEAKER_00]: That's why they're going to cut.
[SPEAKER_00]: They're going to cut despite inflation going up.
[SPEAKER_00]: In fact, look at the news that we got this week on consumer electronics.
[SPEAKER_00]: big price increases from Apple on the iPhone, on iPad, I know Microsoft really jacked up the price of the Xbox.
[SPEAKER_00]: These are the biggest price increases percentage-wise.
[SPEAKER_00]: I've ever seen.
[SPEAKER_00]: And what are the benefits?
[SPEAKER_00]: You know, has been in consumer electronics prices have gone down in many cases over the years that has offset the increases in food and energy and other things So that's been a bright spot consumers have had some relief
[SPEAKER_00]: that, yes, I pay more for just about everything, but at least my electronics are gotten cheaper.
[SPEAKER_00]: Now, they're going up fast with an ever.
[SPEAKER_00]: Now, you can say, well, that's because of the AI race, and it's because of memory is so expensive, now these chips.
[SPEAKER_00]: Yes, sure.
[SPEAKER_00]: But these prices are still in the CPI.
[SPEAKER_00]: falling consumer electronic prices, we're helping to bring down the overall CPI.
[SPEAKER_00]: It offset some of the gains.
[SPEAKER_00]: Now, those price increases are gonna add to the gains.
[SPEAKER_00]: In fact, make them even bigger because of the magnitude of these increases.
[SPEAKER_00]: So there's no way inflation is coming down.
[SPEAKER_00]: inflation is going up, but that does not mean the Fed is going to hike rates.
[SPEAKER_00]: Again, wars that it was a choice, and he's right, and I expect him to choose inflation.
[SPEAKER_00]: Yes, he's posturing now that he's not going to choose inflation, but he's going to make the same choice that Greenspan did, that Bernacchi did, and
[SPEAKER_00]: that yelling did and that pounded.
[SPEAKER_00]: They all made that choice for a reason, because if you choose not to have inflation, then you're choosing to have a recession, because you have to take away the punch ball.
[SPEAKER_00]: We have to go through withdrawal from all this cheap money.
[SPEAKER_00]: We have to contract money supply and credit.
[SPEAKER_00]: Defend doesn't want to do that, because it doesn't want a recession, doesn't want a big increase in unemployment, doesn't want stocks to crash, doesn't want real estate to crash, doesn't want to create another financial crisis.
[SPEAKER_00]: These are the things that are going to happen to really get rid of inflation.
[SPEAKER_00]: So, Wars could talk about it all in once.
[SPEAKER_00]: He ain't going to do it.
[SPEAKER_00]: And it would also force fiscal responsibility on the government.
[SPEAKER_00]: It would force the government to cost spending.
[SPEAKER_00]: or raise middle-class taxes.
[SPEAKER_00]: And why would Donald Trump, who spent the first part of his presidency, calling...
[SPEAKER_00]: The, um, pal, an idiot, a moron, a low IQ, a stupid person, too late, pal, because he refused to cut interest rates.
[SPEAKER_00]: What is he going to do if his replacement raises interest rates?
[SPEAKER_00]: Something that pal wasn't doing, pal, he was just staying pat and Trump was all over the guy.
[SPEAKER_00]: So politically, I don't see how this can happen.
[SPEAKER_00]: Oh, and by the way, I want to mention that Alan Greenspan, who really was the architect of the housing bubble.
[SPEAKER_00]: passed away this week at the old age of a hundred so he lived a long time but unfortunately I guess not long enough to really see the consequences of what he set off because he wrote this playbook
[SPEAKER_00]: He was the fed chairman.
[SPEAKER_00]: He was the maestro from before that well before the dot com bubble.
[SPEAKER_00]: He inflated the dot com bubble.
[SPEAKER_00]: He inflated the housing bubble.
[SPEAKER_00]: He left town and handed it over to Bernaki before the housing bubble popped.
[SPEAKER_00]: But I always blamed it on him when I talk about all of the players.
[SPEAKER_00]: And, you know, I blamed, you know, Congressman, because I was blaming Fanny and Freddie, I was blaming, ablaming, HUD.
[SPEAKER_00]: I was blaming government guarantees, guaranteed mortgages, guaranteed bankouts.
[SPEAKER_00]: There was all sorts of ways government created moral hazard and directly contributed to the housing bubble or inflated the housing bubble.
[SPEAKER_00]: And that's why I knew that we were gonna have a crisis when it popped.
[SPEAKER_00]: But I would talk about various people, but I always said that Greenspan was the ace of space in the deck.
[SPEAKER_00]: He was the number one guy that bore the most responsibility, and he was the most knowledgeable fed chairman we've had.
[SPEAKER_00]: you know, he was a smart guy.
[SPEAKER_00]: He was a iron ran disciple.
[SPEAKER_00]: I mean, he wrote this great essay, gold and economic freedom that was included in her book, capitalism, the unknown ideal.
[SPEAKER_00]: And if you haven't read that essay, read it.
[SPEAKER_00]: In fact, Ron Paul, you know, used to confront him or he confronted him at one point, you know, walking around Congress and he asked him,
[SPEAKER_00]: if he would you know change anything in that essay now and he said I wouldn't change your word and in that essay he basically blamed uh... the entire uh... stock market bubble and crash in nineteen twenty nineteen one on the fed
[SPEAKER_00]: and for printing too much money and for keeping interest rates too low and he advocated for gold standard.
[SPEAKER_00]: He said that gold and economic freedom are inseparable.
[SPEAKER_00]: They go hand in hand.
[SPEAKER_00]: He was a very big critic of the Federal Reserve and that meant he was still a critic.
[SPEAKER_00]: The arrogance of Greenspan was that he believed that he could use his own judgment to create a defacto gold standard.
[SPEAKER_00]: And that's what he said he was doing.
[SPEAKER_00]: when he was testifying before Congress.
[SPEAKER_00]: and asked about the gold standard, he said that he used gold as his main indicator.
[SPEAKER_00]: He said that if gold is up to $400 an ounce, it means I'm too loose and I got a raise raise.
[SPEAKER_00]: If gold goes below 300, I'm too tight and I got a cut raise.
[SPEAKER_00]: So he was claiming that even though we weren't officially on a gold standard, unofficially we were because he was using gold
[SPEAKER_00]: as a way to know whether he had the interest rates right or wrong.
[SPEAKER_00]: Because how are you supposed to know?
[SPEAKER_00]: You just can't guess.
[SPEAKER_00]: You need some kind of market indication.
[SPEAKER_00]: And Greenspan said the best indicator of whether or not you have interest rates too high or too low is the price of gold.
[SPEAKER_00]: Well,
[SPEAKER_00]: If 4,000 meant he was too loose, what does, I mean, a 400, if 400 are gold meant the Fed needed to hike rates, what does 4,000 gold mean now?
[SPEAKER_00]: It means they really need to hike.
[SPEAKER_00]: They're away behind the curve, right?
[SPEAKER_00]: Based on Green Span's criteria, the Fed needs, you know, massive rate hikes, quantitative tightening.
[SPEAKER_00]: Um, so he was the best one as far as understanding yet he still made these mistakes.
[SPEAKER_00]: He still chose inflation over the alternative when the stock market crashed in 1987.
[SPEAKER_00]: Greenspan chose inflation, right?
[SPEAKER_00]: So if a guy like Greenspan, a gold bug,
[SPEAKER_00]: when push comes to shove, if he chooses inflation, why is worse going to be any different?
[SPEAKER_00]: He's not.
[SPEAKER_00]: And so the markets gold and silver are pricing in rate cuts that are probably never going to happen.
[SPEAKER_00]: We're going to have, I mean, rate hikes.
[SPEAKER_00]: The market is pricing in rate hikes that aren't going to happen.
[SPEAKER_00]: And so this is a great buying opportunity.
[SPEAKER_00]: Yes, this week, both gold and silver went down, but they're totally different assets.
[SPEAKER_00]: And one of them is a buy, golden silver,
[SPEAKER_00]: Bitcoin is just air coming out of a bubble.
[SPEAKER_00]: And so what are the opportunities that people have who are still in Bitcoin or in strategy or stretch, you can sell?
[SPEAKER_00]: And then you could take your money and you can buy gold and silver that have also gone down.
[SPEAKER_00]: Because Bitcoin's not going back up to make a new high at 120,000 from 60,000.
[SPEAKER_00]: But silver can easily go from 60 bucks to 120 bucks.
[SPEAKER_00]: So you'll make your money back even if you bought.
[SPEAKER_00]: Bitcoin at 120,000.
[SPEAKER_00]: You don't have to make that money back in Bitcoin.
[SPEAKER_00]: You can get out of Bitcoin, take a tax loss, put that in your pocket, and maybe you can file a lawsuit if, well, if you just bought Bitcoin, I don't know, but if you bought strategy, you can, but you take your tax loss, and now you buy some silver, and when silver doubles, back to its old high, now you're even.
[SPEAKER_00]: right instead of losing more money and I don't think silver's going to stop there.
[SPEAKER_00]: I think silver's got a long way to go.
[SPEAKER_00]: I think 120 will just be a stop on the way to 200 over time.
[SPEAKER_00]: So you can make back your losses from crypto and fool's gold by getting into the real thing.
[SPEAKER_00]: Couple of other points I want to make on today's podcast.
[SPEAKER_00]: Oh, one Bitcoin related to
[SPEAKER_00]: I was listening to interviews with Grant Cardone, who's a real estate guy who now became a Bitcoin guy.
[SPEAKER_00]: And he has these real estate funds that now have Bitcoin.
[SPEAKER_00]: So when you send him money, you get real estate and Bitcoin at the same time.
[SPEAKER_00]: And he concocted an explanation as to why this is some disruptive revolutionary thing that is solving this problem.
[SPEAKER_00]: that reads have.
[SPEAKER_00]: And he said the problem that reads have is that they have to distribute almost all their income.
[SPEAKER_00]: And because they do that, they don't have money left over, you know, to cover operating costs, like maintenance or repairs or things like that.
[SPEAKER_00]: because you just can't go sell your real estate and so by having Bitcoin in there, you now have some Bitcoin and you can sell the Bitcoin to cover your expenses.
[SPEAKER_00]: And so this is some revolutionary concept that he think is going to take over the real estate market, which is absurd.
[SPEAKER_00]: Why the hell would you need Bitcoin with real estate?
[SPEAKER_00]: I mean, if you want to buy Bitcoin, buy Bitcoin, want to buy real estate, buy real estate.
[SPEAKER_00]: There's no reason to buy them both in the same product.
[SPEAKER_00]: And now pay Grant Cardone, a management fee to manage your Bitcoin, Bitcoin doesn't need to be managed.
[SPEAKER_00]: Just store it, right?
[SPEAKER_00]: But he is solving a problem that does not exist.
[SPEAKER_00]: I mean, he ought to know better.
[SPEAKER_00]: He's a real estate guy, right?
[SPEAKER_00]: He's much more in the real estate than I am.
[SPEAKER_00]: Reads earn income on their property, which they distribute, because they earn rents, but they pay their operating expenses.
[SPEAKER_00]: Out of their income before they distribute it, it's a deduction.
[SPEAKER_00]: So to the extent that a real estate fund has maintenance and repair bills, it pays those bills out of its rents.
[SPEAKER_00]: and then what's left over is taxable income.
[SPEAKER_00]: The repairs and the maintenance property taxes, whatever, those are all deductions from the income.
[SPEAKER_00]: What's left over against this trip?
[SPEAKER_00]: You don't need Bitcoin, and of course, even if you want to do some other capital improvements,
[SPEAKER_00]: They still have a lot of cash that they don't have to distribute because they get to depreciate their property.
[SPEAKER_00]: Depreciation is a non-cash expense that reduces your taxable income.
[SPEAKER_00]: That's the beauty of real estate.
[SPEAKER_00]: You get a lot of income that's not really taxed because it's offset by depreciation.
[SPEAKER_00]: So the reach are doing the same thing.
[SPEAKER_00]: So, the cash that they don't have to distribute, they can make capital investments.
[SPEAKER_00]: He said that REITs can't make capital investments, it's been a problem, and now he's solved it with Bitcoin.
[SPEAKER_00]: He has installed the problem for REITs.
[SPEAKER_00]: He created a problem where no problem existed, because now his REITs are going to have the problem of losing money on Bitcoin, because that's all they're going to do.
[SPEAKER_00]: Anyway, oil prices, big drop this week, oil back down, actually below
[SPEAKER_00]: $60 or was it blow up at least he blew it right below $70 you'd be $69 is where oil closed.
[SPEAKER_00]: So I didn't think it would fall this much I don't think it's gonna stay down here though.
[SPEAKER_00]: Yes, the war supposedly is over, but who knows it could restart at any minute But there's a seat fire there are ships that are going through the straight for now
[SPEAKER_00]: But I think this is just a short-term overshoot on the way down.
[SPEAKER_00]: I do expect oil prices to reverse and go up.
[SPEAKER_00]: But at the meantime, hey, that's still good news for the gold silver mining stocks.
[SPEAKER_00]: Because they were having to pay a lot of extra money.
[SPEAKER_00]: That's their biggest cost is energy.
[SPEAKER_00]: And that's come down.
[SPEAKER_00]: By the way, the GDX and GDXJ on the week.
[SPEAKER_00]: they were down about five percent each well well off their highs, but there's a good chance I think that they've seen their lows, abonios were off a little bit, but not very much.
[SPEAKER_00]: I mean, given the big drop,
[SPEAKER_00]: in the price of oil, not much relief in the treasury bond market.
[SPEAKER_00]: The yield on a tenure closed at 4.37, you know, the high was about 4.5 and the 30 years is 4.86.
[SPEAKER_00]: So it was just about five, you know, so very little relief there.
[SPEAKER_00]: So I think we still have a long way to go higher in treasury yields, which is another reason that the Fed is going to continue to expand its balance sheet.
[SPEAKER_00]: And by the way,
[SPEAKER_00]: It's still expanding.
[SPEAKER_00]: If Worse was real serious, he would be shrinking the value right now.
[SPEAKER_00]: It's still expanding.
[SPEAKER_00]: Money supply is still growing.
[SPEAKER_00]: The Fed is still creating inflation.
[SPEAKER_00]: How are you going to fight with your creating?
[SPEAKER_00]: So again, it's all talk.
[SPEAKER_00]: You got to look at what the Fed does, not at what they say.
[SPEAKER_00]: Because they're talking as cheap.
[SPEAKER_00]: They're trying to buy some credibility with tough talk.
[SPEAKER_00]: Because the Fed also places a lot of stock in expectations.
[SPEAKER_00]: They think that inflation is a function of expectations.
[SPEAKER_00]: And if they can get people to expect less inflation, then they think we'll get less inflation.
[SPEAKER_00]: By the way, we did get the consumer sentiment numbers out.
[SPEAKER_00]: Consumers are looking for inflation over the next year at 4.6% so way above the 2% but it is lower than the 4.6% that they expected the prior month and the
[SPEAKER_00]: The actual number, the consumer confidence number is 49 and a half.
[SPEAKER_00]: So below 50, it's still a very low number.
[SPEAKER_00]: But not quite as bad as the 48.9 from the prior week.
[SPEAKER_00]: In fact, I think the worst economic news that came out today was our trade deficit in goods, which came out at 105.8 billion, which was substantially above.
[SPEAKER_00]: would have been expected.
[SPEAKER_00]: I think it was a 28% increase from the prior month for the trade deficit.
[SPEAKER_00]: and it happened as a result of a decline in exports by 5.4 percent and an increase in imports imports went up by 3.6 percent so this is the worst trade deficit in goods since March of 2025 so Trump promised that his tariffs were going to reduce our trade deficits the trade deficits are rising this is the biggest good trade deficit
[SPEAKER_00]: over a year, and it's headed in the wrong direction, and we lost twice, imports up exports down.
[SPEAKER_00]: But I want to finish this up.
[SPEAKER_00]: I want to talk about this interview that I heard.
[SPEAKER_00]: I was on CBC, and I forget the Congressman, and he was talking about this about, and he was repeating these myths.
[SPEAKER_00]: of economics on what we need to do to boost the economy.
[SPEAKER_00]: And one of the things that he claimed credit for creating the middle class was the GI Bill.
[SPEAKER_00]: Kind of saying we need something like the GI Bill because they're the GI Bill, the government gave, you know, that's who we're in the war, money, it sent him to college, gave money for houses,
[SPEAKER_00]: and claim that that's where the economic growth came from.
[SPEAKER_00]: And no, it's not.
[SPEAKER_00]: Economic growth is not a function of government redistributing wealth.
[SPEAKER_00]: We would have had even more regret government growth if we didn't have a GI bill.
[SPEAKER_00]: But the government likes to claim credit for what would have happened anyway, and in fact, what would have happened better without what they did.
[SPEAKER_00]: And so it was necessary.
[SPEAKER_00]: But what I really want to focus by attention on is the other myth,
[SPEAKER_00]: And that had to do with Ford paying his workers $5 a day.
[SPEAKER_00]: And this guy was talking about the dangers of AI because we were going to lose workers.
[SPEAKER_00]: And it's so important that people have these jobs and they have good wages because that's what drives the economy.
[SPEAKER_00]: And he went back to Henry Ford and said, Henry Ford knew this.
[SPEAKER_00]: He understood this.
[SPEAKER_00]: And so, that's why we need to pay workers a lot of money so they can buy their cars.
[SPEAKER_00]: This is a lie.
[SPEAKER_00]: That is not why Henry Ford paid his workers $5 a day, which was about double what the wage scale was at the time.
[SPEAKER_00]: And again, that tells you how much inflation there's been.
[SPEAKER_00]: And by the way, when you got $5 a day, you got five ounces of silver, and
[SPEAKER_00]: But every week, if you earn $5 a day, that's $25 a week.
[SPEAKER_00]: Gold was $20 an ounce, that was like an ounce and a quarter of gold.
[SPEAKER_00]: That's like earning $5,000 a week.
[SPEAKER_00]: So people were making $5,000 a week, working for Ford.
[SPEAKER_00]: and pay no income taxes because they didn't have income taxes pay no Social Security taxes because they didn't have Social Security that was 5,000 a week after tax that's more than the Ford workers are now right so you know
[SPEAKER_00]: Ford workers earn more money without all these government benefits without all these protections back then in Henry Ford's days then they do now but that's not the point I'm trying to make here.
[SPEAKER_00]: The point I'm trying to make is the reason that Ford paid his workers more money was to keep them from quitting.
[SPEAKER_00]: He developed the production line.
[SPEAKER_00]: He invented the production line and it was very specific.
[SPEAKER_00]: You had this big production line where the jobs were split up.
[SPEAKER_00]: One person didn't build an entire cart.
[SPEAKER_00]: One person was responsible for one part.
[SPEAKER_00]: And everybody did their part as the car went down the production line.
[SPEAKER_00]: And that's what enabled mass production.
[SPEAKER_00]: And he spent a lot of time training his workers.
[SPEAKER_00]: and he didn't want them to quit after he invested all this money and training them and then if they quit, it could screw up the whole production line.
[SPEAKER_00]: One guy leaves from the line, you know, now the whole thing stops.
[SPEAKER_00]: So we had to make sure that his workers, that he trained, stay in their job.
[SPEAKER_00]: How did he do that?
[SPEAKER_00]: he could pay the more money not because the government required him to pay the more money but because the market required it competition capitalism in order to produce his cars he needed to pay his workers more money but to show you the absurdity of the claim so when the model chief first came out they were about eight hundred and fifty dollars um a car
[SPEAKER_00]: And by the time they finished production on the model team, the price had come down to $300.
[SPEAKER_00]: So that's capitalism, right?
[SPEAKER_00]: As he became more efficient at producing, he was able to lower his prices.
[SPEAKER_00]: Initially, his margins were about $200, so when he sold the Model T for $850, he made about $200 in car.
[SPEAKER_00]: That was his profit margin.
[SPEAKER_00]: When the Model T's were selling for $300, he made about $100 in car.
[SPEAKER_00]: So he made less per car, but his margin actually went up.
[SPEAKER_00]: But even though he made less per car, he made a lot more money because he sold a lot more cars.
[SPEAKER_00]: Because more people could afford $300, then $850.
[SPEAKER_00]: That shows you the government claims that we need inflation because they say that we need rising prices.
[SPEAKER_00]: No, we need falling prices.
[SPEAKER_00]: Because falling prices is what let more people afford to buy cars.
[SPEAKER_00]: But the government tells us that, well, businesses can't make money when prices go down.
[SPEAKER_00]: They make more money.
[SPEAKER_00]: Henry Ford made a lot more money selling to model cheese for $300 that he did for $850 because his cost went down and volume exploded.
[SPEAKER_00]: So falling prices, everybody wins.
[SPEAKER_00]: The reason we all lose is because the government creates inflation to rob us of the benefits.
[SPEAKER_00]: But again, I don't want to get into that.
[SPEAKER_00]: I just want to finish up by talking about this nonsense.
[SPEAKER_00]: So when you pay your workers at $5 a day,
[SPEAKER_00]: a worker is being paid $1300 a year.
[SPEAKER_00]: At $250 a day, it's $650.
[SPEAKER_00]: So by doubling his workers pay, he was paying each worker an extra $650.
[SPEAKER_00]: Now, even if they went and bought a Model T, he only made $200 on the Model T. So he's not gonna give his workers an extra $650 to get $200 back and lose $450 on every car his workers buy.
[SPEAKER_00]: That's nonsense.
[SPEAKER_00]: He wasn't a bad business man.
[SPEAKER_00]: So no, he did not pay his workers more so they can buy his cars because he would have lost money if that was the reason.
[SPEAKER_00]: The reason he paid his workers more was because he didn't want them to quit.
[SPEAKER_00]: But yes, in an interview, he said, I want my workers to be able to afford my cars.
[SPEAKER_00]: Yes, that was nice PR, that was nice marketing, it was a nice sound bite, but it wasn't the real reason.
[SPEAKER_00]: But yes, a lot of socialists, you know, Democrats like to, uh,
[SPEAKER_00]: misquote him and say you see this is why we have to pay workers more money so they have more money to buy things that is not why you pay workers more money and in fact the job of every entrepreneur is to lower costs
[SPEAKER_00]: because that's the way you lower prices, and that's the way living standards rise.
[SPEAKER_00]: The things that we need become cheaper, they become more plentiful, and they become less expensive.
[SPEAKER_00]: And part of that process may mean that wages come down, but all wage earners are also consumers.
[SPEAKER_00]: And so if the cost of living is going down, faster than your wages are going down, then your real wages are going up.
[SPEAKER_00]: And that's what capitalism does.
[SPEAKER_00]: Capitalism increases, real wages, lowers, real prices, and increases standards of living.
[SPEAKER_00]: It's the government that gets in the way and screws up the works.
[SPEAKER_00]: Government...
[SPEAKER_00]: increases prices, lowers real wages, and lowers living standards, and lowers quality.
[SPEAKER_00]: So what we need is more free market capitalism and a lot less government intervention.
[SPEAKER_00]: Anyway, that's it for today's podcast.
[SPEAKER_00]: Make sure if you're not following me or subscribing to this YouTube channel.
[SPEAKER_00]: Subscribe to it.
[SPEAKER_00]: We following you know, I got over the 600,000 or over 625,000 subscribers.
[SPEAKER_00]: So my next goal is 700,000.
[SPEAKER_00]: How long is it take to get up there, but you know, who can help me out by, uh, by, uh, subscribing.
[SPEAKER_00]: Twitter, my x-rather, excuse me, to Elon, I'm getting close to $1,550,000 now.
[SPEAKER_00]: So I'm really starting to gain about $4,000 a day now.
[SPEAKER_00]: I've been getting, so it's kicking up.
[SPEAKER_00]: So if you're not following me on x,
[SPEAKER_00]: All this stuff, you know, all my warnings about strategy, about stratch, about the Ponzi, I even joked a couple of weeks ago that Michael Sailer was going to have to trade in his, his orange neck tie for an orange jumpsuit.
[SPEAKER_00]: I knew this was coming.
[SPEAKER_00]: a month ago I was saying strategy better lawyer up.
[SPEAKER_00]: I knew the lawsuits that just started yesterday were going to happen.
[SPEAKER_00]: All of this was disclosed on my ex account.
[SPEAKER_00]: So you're going to get a lot of information better information from me.
[SPEAKER_00]: I mean, you get crickets now at CNBC.
[SPEAKER_00]: They don't even discuss this.
[SPEAKER_00]: Oh, yeah.
[SPEAKER_00]: They have sailor on all the time.
[SPEAKER_00]: They talked about stretch and strategy.
[SPEAKER_00]: They gave him a podium.
[SPEAKER_00]: That's why I think they got some liability.
[SPEAKER_00]: I think they're going to
[SPEAKER_00]: that enabled this, that didn't push back when they should have, that just gave them softball questions, that should have known better.
[SPEAKER_00]: And they allowed him, they legitimized this scam.
[SPEAKER_00]: They're probably going to get sued, too.
[SPEAKER_00]: But the truth comes out on my ex account.
[SPEAKER_00]: So make sure that you're following me and get your followers, the people who follow you, get them to follow me, too.
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[SPEAKER_00]: Leave a comment and that will also help with the algorithms so more people will see this podcast.
[SPEAKER_00]: Anyway, bye for now.